This copy is for your personal non-commercial use only. To order presentation-ready copies of Toronto Star content for distribution to colleagues, clients or customers, or inquire about permissions/licensing, please go to: www.TorontoStarReprints.com

A new travel company promising to bring low airfares to Canada officially launches with four flights Monday after an aborted takeoff earlier this year.

“It’s been so long coming. We just can’t wait,” said Dean Dacko, NewLeaf Travel’s chief commercial officer, in an interview.

NewLeaf Travel first announced its launch plans in January, flying non-stop flights between smaller cities on routes such as Hamilton to Halifax, but it immediately hit turbulence over licensing questions.

That prompted the Winnipeg-based company to suspend ticket sales and refund customers as it awaited a ruling from the Canadian Transportation Agency.

The agency determined that NewLeaf Travel was a ticket reseller and not an airline, and thus was not required to get its own licence. It has contracted all flying with Kelowna-based Flair Air, using its 156-seat Boeing 737s.

Article Continued Below

So last month, NewLeaf rebooted its plans, launching its route map — promising to serve 12 cities, including 22 flights a week from Hamilton, up from the original seven cities.

It has since dropped Fort St. John, in northern B.C., as it tweaks an initial network to 11 cities, adding flights between Edmonton and Winnipeg.

Modelled on ultra-low-cost carriers like Spirit Airlines or Allegiant Air, a New Leaf fare covers only the seat and seatbelt, and passengers will pay for any extras, from advanced seat selection to bringing along a carry-on bag.

While NewLeaf is vowing to expand quickly — starting with three aircraft next week and adding an airplane every month for the rest of the year — other aviation startups have struggled, including failed airlines such as Jetsgo, Roots Air, Greyhound Air and Canada 3000.

“The first six months will be critical for make-or-break,” said Marvin Ryder, a professor at the DeGroote School of Business at McMaster University. “Usually, the barrier to entry for an airline is acquiring the planes. NewLeaf has done this correctly. It is leasing the planes.” That means Flair Air is responsible for the pilots, flight crew and maintenance of the aircraft.

But one of the biggest hurdles now for NewLeaf is its failed start in the spring, which makes consumers cautious about being the first passengers, Ryder said.

Dacko insists that’s not an issue. “We have a number of flights that are sold out entirely or very, very close to being sold out. It’s way beyond what we had set as our initial forecast,” he said.

The company sent out email offers this week for 50 per cent of base fares. “We just didn’t want to be full, we wanted to be completely full. That’s why we did the last-minute push to take it over the top,” Dacko said.

President and CEO of NewLeaf Travel Jim Young. (John Woods/THE CANADIAN PRESS)

Main competitors such as Air Canada and WestJet Airlines have already quickly responded with competitive fares and new routes. Just one day after NewLeaf’s announcement, WestJet said it would fly between Edmonton and Hamilton, and Winnipeg and Kelowna — matching NewLeaf’s routes.

“They only seem to bring those fares on the days of the week we are flying,” Dacko said.

Even though NewLeaf says it’s ready, questions have been raised.

The company has faced allegations about unpaid bills, with Hessie Jones of ARConsulting filing a lawsuit in Ontario this week seeking more than $76,000 in unpaid invoices, 10 per cent interest on the outstanding amount, and $20,000 in punitive damages.

Dacko said these business discussions are best positioned when parties are talking, and “it is unfortunate they went this direction,” declining to comment further.

Meanwhile, Gabor Lukacs, an airline passenger rights advocate, has appealed the Canadian Transportation Agency’s decision on NewLeaf Travel’s licensing, arguing that travellers are not protected under the ticket reseller model.

No court date has been set, but on Thursday, Lukacs filed an injunction motion asking the court to require NewLeaf put up $3.7 million in financial security to ensure passengers won’t be stranded anywhere.

“I think NewLeaf has to put their money where their mouth is,” Lukacs said. “I’m trying to create some clarity. If NewLeaf wants to gamble the money of the investors, it’s their choice.

“It’s not right for a company to gamble with the money of travellers,” he said.

York University business professor Fred Lazar says the Canadian marketplace cannot sustain more than two national airlines, noting that when WestJet Airline launched two decades ago, Canadian Airlines was still flying.

He conceded that niche carriers with specific routes will continue to operate, such as Porter Airlines at Toronto’s island airport or carriers that service Canada’s North.

For NewLeaf to succeed, it needs to ensure that its planes are flying as much as possible. “You can’t just fly from point A to B and back to A,” Lazar said. “If they stay small, they can become a small niche carrier.

“If they try to expand with more frequent and more dense routes going head to head with WestJet or Air Canada, that would be the kiss of death,” he said. “If they stick with four or five planes and make a little money, it’s a nice, small, niche business.”

But other companies are also hoping to enter the ultra-low-cost carrier business, including Vancouver-based Canada Jetlines and Calgary-based Enerjet, a charter business that focuses on flying workers to oilsands sites.

Canada Jetlines says it has an interested investor, but needs an exemption on the 25 per cent limit on foreign ownership for airlines. Transport Canada says the exemption request was made in May. Additional documents were just submitted, so Transport Canada is currently reviewing the request.

“When you start an airline, you will expect routes that will require subsidy,” said Jetlines president and CEO Jim Scott. “If you don’t have cash at the beginning, you will run into a cash crunch.”

Canada Jetlines is also looking to get listed on the venture exchange with a reverse takeover of Jet Metal, which holds a shareholders’ meeting later this month on the proposal.

Enerjet’s chief commercial officer Darcy Morgan says that it continues to work on its own plan. “It’s really about putting proper resources in place,” he said. “It’s not to be the first out of the gate. We are focused on doing our homework.”

Although Enerjet originally floated the name Jet Naked for its airline, it has revised it to FlyToo, a reference to the many Canadians who want to fly as well, Morgan said.

York’s Lazar said the marketplace in Canada cannot sustain three ultra low-cost carriers. “It’s a matter of who has deeper pockets. Of the two or three, one might survive. All three will not survive,” he said.

More from the Toronto Star & Partners

LOADING

Copyright owned or licensed by Toronto Star Newspapers Limited. All rights reserved. Republication or distribution of this content is expressly prohibited without the prior written consent of Toronto Star Newspapers Limited and/or its licensors. To order copies of Toronto Star articles, please go to: www.TorontoStarReprints.com